Are remittances a solution to housing issues? A case study from Sri Lanka

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Social Sciences and Humanities Open


The objective of this paper is to analyze the impact of remittances on four different aspects of housing investment – expenditure, affordability, quality and household assets in Sri Lanka. Housing expenditure is calculated based on the household expenditure on housing rent, house building or repair cost, and utility bills, while housing affordability is measured by shelter poverty index. The housing quality index is developed based on the structure of the dwelling unit, housing services, and the location. An overall assets index was developed using 45 household assets. The house's location is crucial to enhance the quality of housing, location-based characteristics were considered in constructing the housing quality index. Receiving remittances has a self-selection issue since it is not a random process. The propensity matching score method was employed in the current study, overcoming the issue of self-selection. The study finds that though there are differences between sectors and income groups, remittances positively and significantly affect housing expenditure, affordability, and assets, but the impact on housing quality is minimal. The findings give insight into the areas, in which policymakers can focus to improve the impact of remittances on different aspects of housing and thereby reach SDG targets of “leaving no one behind”.

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